JENCKS 'l1. LANGDON MILLS.
contend that Jencks agreed to give the company the free use of his inven,tions as an advantage to him in introducing them elsewhere; that he was to make no charge for royalty, and that no royalty was ever paid; that he took the time which belonged to the company to devise and experiment with his improvements; used the tools, men, and of the company in making the improvements; and tested them in the machinery which was run by the company. As to the two earlier inventions, the plaintiff testifies, in substance, that he was given to understand by Mr. Killey, the agent of the fendant company, that they had a right to the free use of his tions because he was in their employ; and that he allowed the poration to use them because he believed this. He further testifiea that in August, 1874, he learned that the company had no right to use his inventions because he was in their employ; and that he then told Mr. Killey he had applied for a patent on the bolsters, and should expect the company to pay for them, if the patent was allowed. After the allowance of the patent he says he had an interview with Mr. Killey, in which he stated that the company had deceived him about the first two patents, and demanding pay for the use of his inventions, which resulted in the company giving him $250 a year for the use of his inventions from the spring of 1876 until about the time he left the employment of the company, 'in December, 1877. He does not remember that any reference was made as to how long the $250 a year was to continue, but he thought it was to continue so long as the company used his improvements. Mr. Killey admits that he told Jencks that the company the right to the free use of his inventions because he was in their employ. He further says that Jencks was very anxious that the company should adopt his adjustable ring, as it would be an advantage to him in introducing his improvements. For this reason, he agreed that the company should pay nothing for the improvement, and that this agreement extended to all improvements, and therefore covered the bolster patent now in controversy. As to the $250 a year paid to the plaintiff for about a year and a half, Mr. Killey and Mr. Amory, the treasurer of the company, both testify that it was paid as additional salary upon the complaint of Mr. Jencks that the company was not treating him fairly. This position is confirmed by the form of receipt taken from the plaintiff, wherein it appears that the money was paid as additional salary. Again, in a letter from the treasurer to Killey in October, 1877, he notifies him that the business of the company will not warrant the payment to Jencks after that month of his extra salary. . The great weight of evidence is in favor of the position taken by the defendants that the $250 was not paid as a royalty for the use of the inventions, but was given to the plaintiff as additional salary because of his services to the company. That Jencks was willing and desirous that the company should have the free use of his in-
ventionfl as an advedisement is supported by the testimony of other witnesses, who had conversations with him. It is also in evidence that the tools and materials used in making the improvements were furnished by the defendant company.... Upon the proof before us, we think the defendants have shown a special license to the free use of the patented bolsters and other improvements put into their mills by the plaintiff while in their employ. The courts have held, in cases where the facts were less favorable, as it seems to us, to the defendants, than in the present case, that a license from the, patentee was to be presumed. McClurg v. Kingslanil, 1 How. 202; Barry v. Crane, 22 Fed. Rep. 396; Wilkens v. Spafford, 3 Ban. & A. 274; Magoun v. New England Glass Co., ld. 114. We do not think the evidence supports the position taken by the plaintiff that if there was' any license to use the patented bolsters it was 011 condition of the payment of $250 a year so long as the defendant corporation used them, or the life of the patent. We are relieved, therefore, from deciding the question whether, if such was tbefact, the defendant corporation might not now be sued as an infringer on the ground that it had repudiated the license by its failure to pay the royalty for a number of years. It also becomes nnnecessary to decide whether such a parol contract as the plaintiff has sought to make out would not be void under the New Hampshire statute of frauds. It is clear that the statute has no app1il'lation to the license which we find upon the evidence exists between the parties. This suit being between citizens of the same state, and there appearing to be a subsisting license between the parties, the court has no jurisdiction, and the bill must be dismissed. Hartell v. Tilghman, 99 U. S. 547. Bill dismissed.
ERVIN II. OREGON RY. &: NAV. CO.
Co. and another.
(OVl'cuit Court, S. D. New York.
May 27, 1886.)
RELATION OF MAJORITY AND MINORITY-
When a number of stockholders combine to constitute themselves a maJority, in order to control the corporation as they see tit, they become, for all practical purposes, the corporation itself, and assume the trust relation of the corporation towards its stockholders; and, if they seek to make profit out of it at the expense of those whose rights are the same as their own, they are unfaithful to the relation they have assumed. and are guilty, at least, of constructive fraud.
Although the minority of the stockholders cannot complain because the majority have dissolved the corporation, and sold its property. they may justly complain where the majority, while occupying a fiduciary relation towards the minority, have exercised their powers III a way to buy the prop· erty for themselves, and exclude the minority from a fair participation in the fruits of the sale. Under the rule of equity which entitles those whose property has been mis· applied by an agent or fiduciary to follow it into any form in whi.ch it has been converted. and impress it with a trust whenever its identity ca I be traced, or. at their election, to recover the value of the property in any form into which it has been transmuted, where the majority of the stockholders merge the business and property of the corporation with other business and properties belonging to themselves and embark the whole in a joint venture and sell the corporation's property to themselves, the inquiry, in a question with the minority, is, what IS the property worth to the purchasers as a constituent of their general properties?
SAME-FoLLOWING TRUST FUND.
The minority of the stockholders have an equitable lien, to the extent of their interest, upon the property of the corporation which has been sold by the majority to themselves, in breach of their fiduciary relation. Actors in the transaction by which the minority of the stockholders have suffered, are proper parties to suits at their instance. '
In Equity. William Allen Butler and Thomas H. Hubbard, for complainants. John F. Dillon and Artemus H. Holmes, for defendants. WALLACE, J. When this case was before this court on demurrer, (20 Fed. Rep. 577,) the questions of law arising upon the allegations of the bill were fully considered. It was then determined that, although the majority of stockholders of the Oregon Steam Navigation Company were authorized by the statutes of Oregon, under which the corporation was organized, to dissolve the corporation. dispose of its property, and divide the proceeds despite the opposition of the minority stockholders, and although the majority exercised this authority in the mode which the organic law of the corporation permitted, nevertheless they had no right to exercise their control over the corporate management for the purposes of appropriating the property or its avails to themselves, to the exclusion of a minority, or with. out reiJdering them a fair return. v.27F.no.9-40